Scottish Court of Session Decisions

Subject_1 PERSONAL and REAL.
Subject_2 SECT. IV.

Pactions, Declarations, &c. by Back-bond or otherwise, qualifying real Rights.

Katharine Clark
v.
John Robertson and Others

Date: 4 July 1781
Case No. No 51.

A party conveyed his estate to trustees, directing them to pay his debts, and account for the residue to his son. The trustees, without entering on the management, denuded in favour of the son, who became insolvent. A person to whom the father had been personally liable for an annuity, found to have no preference.

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Alexander Harvey left a considerable estate to his three daughters, burdened with an annuity of L. 65 Sterling to Janet Clark, his relict. One of the daughters was married to Joshua Johnston; who, wanting money to throw into trade, prevailed upon his mother-in-law to make way for a sale of the subjects, by giving up her security, and accepting of a personal bond for her jointure, from him and the other partners of a company in which he was engaged.

Among these were John and James Jamieson, father and son; who, in this way, came to be personally liable for Mrs Harvey's jointure. John, some time before his death, executed a settlement in the form of a trust-disposition, whereby the trustees were directed to convert his estate and effects into money, for payment of “all his just and lawful debts,” particularly certain family provisions therein mentioned, and to account to his son, James, for the residue.

Upon John's death, his trustees, without entering upon the management, executed a disposition, proceeding upon the narrative, that James had paid or given security for the provisions and debts specified in his father's settlement, and had become bound “to satisfy and pay other debts, and perform any other deeds that might be owing or prestable by his late father;” and, therefore, disponing to him, his heirs, and assignees, the subjects and rights vested in them by the trust-disposition above mentioned.

James accordingly took possession of every thing, and continued in good credit for several years. But, being engaged, as a partner, with Buchanan, Hastie, and Co. who failed, he found it necessary to convey his whole subjects, heritable and move, to trustees, for behoof of his creditors.

Against these trustees, Mrs Harvey brought an action for having it found, John Jamieson's heritable estate was really burdened with her annuity, for which he, along with Joshua Johnston and others, had given bond; that, in virtue of that bond, and the trust-disposition executed by him, she was a real creditor upon his estate; at least, that the obligation constituted by said bond in her favour, was a preferable debt, in the question with a creditor of James Jamieson, or Buchanan, Hastie, and Co.

In the course of this process, Mrs Harvey died; but the cause was taken up by her sister, Katharine Clark, as having right to the bygone annuities; and, for her, it was

Pleaded; John Jamieson became debtor for the annuity in question, by joining as co-obligant in the bond granted to Mrs Harvey. The payment of his debts was one of the primary objects of the trust-deed executed by him; and all that James had right to was, the residue or reversion. The subsequent conveyances, from the original trustees to James, and from him to the defenders, had both of them that trust-deed for their basis; and, therefore, could carry no more of the estate belonging to John, than what remained free, after paying all his Creditors.

Had James made up titles to the estate in question, as heir; and, after possessing it for three years, had conveyed it to trustees for payment of his debts, it may be admittied, that his father's creditors would have had no preference over his own; but, coming in place of the trustees appointed by his father, the purposes of that trust remaining unexecuted, he could not, in any way, disappoint the jus quæsitum which his father's creditors had over the estate assigned to him. Had James himself been sole trustee, he could not have inverted the estate to the payment of own debts; and, it does not occur, how his right should be rendered broader, by his coming in the place of the trurtees.

Answered; James Jamieson's credit was such as fully justified his father's trustees in giving up the management to him; and, accordingly, they were assoilzied from an action at the instance of one of John Jemieson's creditors, who endeavoured to make them liable for his debt, on account of their having conveyed the estate to James, without taking security, that the purposes of the trust should be fulfilled.

James, however, stands in a very different situation. He was his father's apparent heir; the residuary legatee of all his effects; and, when he accepted of them without inventory or accompt, under the condition of paying his father's debts, he subjected himself universally to all, such claims. He is, by the act 1695, by the express tenor of the settlement, and by every rule of law, liable to pay them to the last farthing.

At the same time, the creditors of John Jamieson have no real lien or preferable claim over the subjects. If they have, they must be preferred not only to James's personal creditors, but to such as, trusting to the public records, may have lent him money on the security of an estate which appeared to be altogether unencumbered.

But, that they have no such lien, is evident from this consideration, that, if the original trustees had exercised the power conferred upon them by the trust-disposition, and sold the subjects, a purchaser from them would have been safe; and, had the trustees, instead of fulfilling the purposes of the trust, applied the money to their own use, the creditors of John Jamieson would have been in no better condition than the private creditors of the former.

Even supposing that the subjects had been conveyed, without the intervention of trustees, to James himself, but under the same burdens and conditions as occur here, the obligation to pay “debts in general,” could never have constituted a real security in favour of such creditors; Broughton contra Gordon, June 20. 1739, infra h. t.; Stenhouse contra Innes, February 21. 1775, infra h. t.; Camerons contra Creditors of Cameron, see Appendix. Neither is it very obvious how the word trust should make any alteration on the nature of the deed. Every disposition by a father to a son, with the burden of debts, is a trust; but still the burden remains personal, unless the debts are specially enumerated in the disposition, and engrossed in the investiture. Were it otherwise, the security of the records would be overthrown; and, henceforth, every settlement would be conceived in the form of a trust-conveyance to the heir, with a general burden of latent family-provisions, sufficient to cover the whole estate, and to prevent it from being affected by any debt he might contract.

In the present case, the record did not point out James as even nominally a trustee. He completed his feudal title upon the procuratory contained in his father’'s disposition, which the trustees had never exhausted, and appeared as absolute proprietor in his own right, with the burden only, which the law itself laid upon him at any rate, of paying his father's debts. To that effect, he was, no doubt, personally bound; but no real lien was created upon his property; Erskine's Institute, B. 2. T. 3. § 48. & 49.

Replied; It is of no consequence that the debt in question was not particularly mentioned in the trust-deed; nor is it necessary for the pursuer to contend, that her sister had a real lien over the subjects, which would have affected a singular successor. No such lien was created in favour of any of John's creditors; on the contrary, the trustees were empowered to sell the subjects; but, while they remain unsold, they are primarily liable to the granter's creditors, whose interest cannot be affected by the debts of the trustees, or those to whom they assigned the subjects.

It may be admitted, that, where the absolute property is conveyed, either to an heir or to a stranger, with the general burden of all the granter's debts, no real lien is established in favour of the creditors; but, here, there was no conveyance of property. The subjects were disponed in trust, for certain purposes particularly mentioned; and, so long as they are held under that title, they must, in the first place, be applied to those purposes.

The Lords found, “That Katharine Clarke had no preference over the other Creditors of James Jamieson for the debt in question.”

Lord Ordinary, Justice-Clerk. Act. Wight. Alt. Ilay Campbell. Clerk, Tait. Fol. Dic. v. 4. p. 66. Fac. Col. No 71. p. 119.